Outsourcing May Create U.S. Jobs

Thw Wall Street Journal (registration required) ^ | 03/30/04 | Micheal Schroeder

[TonyInOhio]

WASHINGTON -- U.S. companies sending computer-systems work abroad yielded higher productivity that actually boosted domestic employment by 90,000 across the economy last year, according to an industry-sponsored study.

The analysis, one of the few that attaches detailed dollar values to offshore outsourcing's costs and benefits, was conducted for a coalition of business groups working to combat a growing backlash on Capitol Hill and in statehouses against the loss of U.S. jobs.

[Agnes Heep]

Absolute B.S. Everyone knows that whatever savings may be produced by outsourcing will immediately be seized by greedy capitalists and stuffed inside mattresses. That, I think, is axiomatic.

[TXBSAFH]

Do not whiz down my back and tell me it is raining. Outsoursing is hurting a good many people in this country.

[Uncle Miltie]

Oh No!

[Mr. Bird]

I don't think anyone disputes the fact that specific individuals can be harmed by the practice. That goes without saying. This article raises the possibility that generally speaking, outsourcing is not bad for the economy.

Of course, the stats were compiled by a group with their own agenda, so some grains of salt may be required. But I don't think it adds much to the debate when someone just pouts about the issue without presenting some informed data.

[CasearianDaoist]

This article is a pure polemic with little more that pro-offshoring sloganeer. It does not make even logical sense in ad of itself. Even their goods and services export/import ratios show a deficit. The pro-offshoers do not even feel that they have to make cogent arguments anymore. I love how the talk about low wage job growth in fields like construction as some how a compensation for shipping overseas you engineering function. It is just a pathetic argument. Not that they do not even try to say that the high paying jobs going over seas will be replaced by an equal number of high paying jobs. They quite studiously (and dishonestly) avoid the issue.

What they do not understand is that this time around they are not dealing with factory workers but people just as educated and experienced in the professional world as they are. This business is not going to be resolved without a very hard, rational and thoroughgoing analysis and debate.

ANd they will lose that debate sooner or later.

[CasearianDaoist]

sloganeering=sloganeer.

[TXBSAFH]

Out sourcing may help the economic numbers but it hurts the people in this country far more then if helps. I know of to many people who are or have been out of work because of it. Back in 2002 I have to help train my replacement from Korea. Outsourcing is harmful to the citizens of this country.

[1rudeboy]

we're doomed

[1rudeboy]

Not that they do not even try to say that the high paying jobs going over seas will be replaced by an equal number of high paying jobs. They quite studiously (and dishonestly) avoid the issue.

Studiously and dishonestly? One can post real-wage data here until one is blue in the face, and it won't matter to you one whit. It's like you believe the Earth is flat.

[TXBSAFH]

If this issue gets a big as I think it can and Kerry comes out hard against outsourcing and off shoring, GWB's election chances maybe doomed. People vote their wallets.

[CasearianDaoist]

Yes and those groups will benefit are the very small groups of senior management of large multinational corporations, the Socialist functionaries that will run the welfare state that must ensue from this, The offifical NGO players in world government (the WTO, UN, IMF,) the unofficial NGOs, foreign elites and the rentier class which shall be the only people who can afford to own any sort of assets all together.

They are taking apart this nation via international government, unchecked immigration and the offshoring of all productive economic activity, particularly manufacturing and engineering. And when they are done and there is no avenue for economic freedom there will be no avenue for political freedom. It will be industrial serfdom.

NWO here we come. Globalism is socialism. Socialsim is Serfdom.

[1rudeboy]

I agree. But believing that economic matters play a role in elections is hardly a revolutionary concept.

[chimera]

I love how the talk about low wage job growth in fields like construction as some how a compensation for shipping overseas you engineering function. It is just a pathetic argument.

There was a good case study of this misguided principle back in the 1990s when Clinton was canceling all of the nuclear research programs at Idaho National Lab. That was when Hazel O'Leary was running the DOE. Madame Secretary's edict was that INEL employees shouldn't worry, because she was going to see to it that there were "no net job losses at INEL". Sure enough, that was the case. They fired a bunch of research people, Ph.D.-types working on innovative things like the IFR and the closed fuel cycle, inherent safety in power reactors, medical isotope production, neutron transport, and the like. They hired a bunch of janitors to do "cleanup work". But there were no "net" job losses. Sure, a good many capable, highly skilled and educated people were ruined, and we're poorer as a country because of it, but, hey, those jobs in R&D were replaced with janitorial work, so what's the big deal? Sheesh!

[expat_panama]

I don't think it adds much to the debate when someone just pouts about the issue without presenting some informed data.

You're right if we first agree that 'outsourcing' is only good or bad if it keeps us from earning money and buying things.  If that were the case then we'd just look at the record.  We'd see that we've outsourced 3 million jobs overseas every year for decades and America's workforce is better off.  OK, there are some bush-bashers that are earning less money and live in a smaller house than 10 years ago, but that's a different problem altogether.  

But none of that is important.  The belief here is that overseas outsourcing (AKA 'off-shoring') is wrong whether we're better off or not.  No matter if say, imported medical care could save American lives (Americans must be martyrs in the fight against outsourcing) just as it doesn't matter if imported firearms are essential for defense (better a defeated US than rich foreigners).  This is a passionate issue, not a logical one.

[harpu]

OUTsourcing vs INsourcing! Imagine the answer to the question;

"Would the U.S. gain or lose jobs IF all foreign-owned companies took all of their U.S. based jobs back home, and all U.S.-owned companies pulled back their foreign-based jobs back to the U.S.?"

[harpu]

IF "Outsourcing [assumed to be Offshoring] is harmful to the citizens of this country."...Is foreign-owned manufacturing based in the U.S. also harmful to the citizens of this country?

[DustyMoment]

My disagreement with the notion that outsourcing is good for the economy stems from the outdated economic theory. The current economic trend has defied traditional models as evidenced by how large the error is in economists trying to predict future events. It also accounts for the strong economy with the, so far, currently jobless recovery.

Outdated economic models also explains how Greenspan has dropped the interest rates with no appreciable affect on the economy. It took the addition of Bush's tax cuts to jumpstart the economy and produce the current growth minus the accompanying increase in jobs.

[TXBSAFH]

WHen you take into account the large number of high paying jobs in this county that have gone and the fact that they are not being replaced by comparable of better jobs outsourcing is harmful to the people of this country.

[CasearianDaoist]

Yes, I worked at SLAC, LBL Nat. Labs and Livermore Labs when I was in grad school in the 70s and I am well ware of this trend (physics was not my field, I was doing support work in Math,EE and CS for a buck.) It echoed across the entire national lab infrastructure and it is one of the reasons that basic research today is lagging so, and not just in nuclear physics.) It is sad that the Euros will soon have better facilities and "intellectual infrastructure in HEP than we do. I guess we are "outsourcing our Nobel prizes winners too.

Oddly enough this also happened in electrical utilities after "deregulation" particularly in California. They let all the experienced engineers go. Now it costs a real bundle to re-engineer anything and products are over engineered because they just cut and paste the old specs because of a lack of understanding of those specs and the fact that technology has rendered some of them obsolete.

I just happen to know this as I had to do an analysis of the industry a couple of years ago.

But look at Bell Lab (Were I onced worked.) BTL is a tiny fraction of what it once was and is hardly doing any basic reseacrh any more. About the only big Research institution in the private sector doing long-term basic research is IBM Research (worked there too,)and maybe Sarnoff and that is an international undertaking not really and American one. They have more installations overseas than they do here. People like Microsoft do not do this sort of research at all - they really do mid-term product research or at best "product feature" research.

So we are going to have problems down the road.

[chimera]

Bell Lab/Lucent is a very sad, tragic case. Here was the premier industry-funded research center, the inventor of the one device that makes it possible for us to be here at all, on-line, using PCs, and it's a shadow of its former self, a cadaverous remnant of the intellectual greatness that once reigned. Carly Fiorina really ruined Lucent, and now she's in the process of gutting H-P, but still getting multimillion dollar bonuses for offshoring all those engineering functions, and making the quarterly bottom line a little fatter (temporarily). But, hey, I heard Carly advertised for a stewardess position on her private jet, so that made up for those tens of thousands of engineering jobs she sent overseas.

RCA/Sarnoff? That's down the tubes as well. My cousin's husband just got laid off from there after 41 years with them. When GE bought out RCA they just gave Sarnoff Labs to SRI, who has basically run the place into the ground. Pretty sad for the place that essentially invented the NTSC color TV system.

[rudypoot]

We export and import jobs in this country. We have been doing this for decades. If you subtract the imported jobs from the exported jobs you find that we have a net GAIN in jobs. Manufacturing jobs are being exported because we can do more with less manpower. It's called increased productivity. The imported jobs are not low paying either. They are technical jobs. When you force companys to pay higher wages to keep jobs here YOU HURT THE ENTIRE COMPANY.

You fell in to the trap: you bought the democrats' crap.

[TXBSAFH]

I do not care on wit about any company. I am more worried about the middle class of the US. Most companies int this world have not loyality to this country so why should I have any loyality to them. They are looking out for themselves and I will look out for myself and for interest I think will benefit me. I do think that outsourcing is hurting the middle class and I have seen it hurt me and my family. I want it curtailed, and if that hurts some company so be it.

[CasearianDaoist]

Yep, I agree with you about Carly but I think that she is just a more obvious manifestation of the whole probelem - arrogant boomer MBA types in senior management that are killing the goose that laid the golden egg because they cannot understand what hard work it took to buld our science and technology culture and economy. They think it will be there forever. They are wrong.

I did not know that about Sarnoff, sorry to hear it.

[TXBSAFH]

I once worked for HP in Houston, she is sending every job overseas she can. A lot of good talented people are sent packing.

[chimera]

Yes, it is symptomatic of a serious, perhaps fatal syndrome, one based in short-term seeking of profit at all costs, a lack of vision and a sense of where the trends will lead if unchecked. This country sold out its manufacturing and industrial base, and now it is selling out the intellectual capital and infrastructure. That will leave nothing other than insurance salesmen, lawyers, and burger builders.

What I find amazing among the pro-offshoring types, those who seem to advocate and cheer on this process as if it were something good for the country, is that they either deliberately or perhaps stupidly overlook a fundamental axiom that is as clear as the nose on your face. That is, as a country becomes more and more dependent on outsiders for its necessities, the more vulnerable it becomes to conquest by siege. We're literally placing the lives and well-being of ourselves and future generations in the hands of outsiders, some of whom have made clear they do not have our best interests at heart.

[SteveH]

Outsourcing moves skilled jobs overseas.

Knowledge workers whose jobs were outsourced are "displaced": their skills no longer needed in their own country, they can either move to Bangalore and take a 600% reduction in wages, or find another job.

Since their skill set is no longer needed in the domestic marketplace, they can start over at the bottom of the economic food chain, either minimum wage jobs or by going back to school to learn another skill set.

However, learning another skill set does not necessarily qualify the (former) high-skilled worker for another job, since the effects of age discrimination are neglected. Few people in practice, given current laws, will hire an older worker when a younger worker will do.

Even high skilled workers entering the minimum wage job arena compete with illegal aliens.

The effect of wiping out entire job segments has a trickle down effect on other segments of the economy (starting with office rent space and house construction).

Meanwhile, dollars entering circulation are sent overseas by aliens, legal and illegal, where they become indistinguishable from being "stuffed into mattresses" since they are used in foreign countries to displace local currencies, and are not spent domestically.

I suspect most economic models do not account for many of the above factors, and beyond that, tend to focus on overly rosy statistics, such as domestic mean income[/spending] versus domestic median income[/spending].

[WilliamofCarmichael]

Savings to create jobs in education, health care and financial services

Those were already on the list of future job demands.

At least the author cited a source and didn't just type in a list of platitudes. Of course, the source is a study paid for by an organization favoring outsourcing. Fair enough. At least we were told.

In the interest of making globalists appear to be making "more-informed judgments" there is good news!

Platitoogle, soon to be available! A new research tool for globalists, et al. Tired of those mean-spirited anti-globalists protectionists having sources and you don't?

Here's how it works. Type in your area of interest and your favorite platitude. For example, Globalism "Free trade will make people happy all over the world."

Platitoogle will locate news articles about globalism and insert your platitude into the text! Just copy and paste. Bingo! You can put those dirty Kerry supporters right where they belong!

[CasearianDaoist]

What I find amazing among the pro-offshoring types, those who seem to advocate and cheer on this process as if it were something good for the country, is that they either deliberately or perhaps stupidly overlook a fundamental axiom that is as clear as the nose on your face.

That is because they are ideologues, and monomaniacal ones at that. What is ironic is they think it is a conservative stance. It is the Democrats that have pushed this business historically for the very reason of replacing the "productive" elites with their financial, media and bureaucratic elites. In the period from the 30s to through the 40s they were doing this on a national level but since that time they have been pushing it on an international level. The GOP bought in because the Dems were smart enough to court business interests, some in the RTAA period and then the rest in the GATT period, a period ironically where the GOP was not particularly consevative. It worked when we had the only factories standing in the world so no one in the GOP cared or saw the danger. So they are actually mouthing what historically has been a Democrat argument.

Globalism is by its very nature Socialism not Capitalism.

And, as you say, our heritage is one of liberty and independence, not global integration in either the economic or political spheres

I can only hope that there will be a real and pointed national debate about this.

[rudypoot]

Ask yourself one question: Why does anyone go into business in the first place. Is it:
a) To make money
b) To provide jobs

A guy starts a business to make money. No one starts a business thinking, "Hey, 10 people in this area need jobs, so I think I'll start a business to employ them." Carry out your line of thinking to it's ultimate conclusion: A FAILED COMPANY THAT EMPLOYS NOBODY.

Obviously, you are too angry to do any research on the subject. Look at the import/export job numbers yourself. If you really care about the subject then you'd do it. Back up your claims with facts. All you are doing is regurgitating what's been fed to you.

[TXBSAFH]

I have one over riding fact, I had to train the guys from Korea that took my job. We were making a profit in my division. But we were outsourced anyway. I have read, sorry do not remember where that about 75% of the jobs that have been outsourced were profitable in the US. They were moved overseas anyway. The company was looking out for itself and did not give a care about it's people. So I will do the same.

[templar]

Not that they do not even try to say that the high paying jobs going over seas will be replaced by an equal number of high paying jobs. They quite studiously (and dishonestly) avoid the issue.

They also have a strong tendency to avoid talking about the balance of trade deficits or loss of tax revenues.

[familyofman]

Outsourcing may be good for the US economy.
Overeating may lead to extreme weight loss.

The qualifier 'may' allows for a lot of speculation to be presented as 'fact'. If US exports are increasing so greatly - why do we have record trade deficits?

[chimera]

However, learning another skill set does not necessarily qualify the (former) high-skilled worker for another job, since the effects of age discrimination are neglected. Few people in practice, given current laws, will hire an older worker when a younger worker will do.

This is the real killer of the "screw 'em, let 'em go back to school and learn new skills" argument/platitude. Becoming educated, learning a new skill set, building a career through experience, all take tremendous amounts of time, if you want to be a really skilled practitioner of your trade. An engineer with 4 or 6 or 8 years of advanced schooling usually needs an "apprentice" period, a time of learning by doing, gaining experience, to really become proficient. In many ways, its much like becoming a doctor or a lawyer. You need a lot of time. You just don't one day say, hey, I'm going to be an engineer or doctor or nurse, and the next day start doing it, as some of these pro-outsourcing types seem to think is the case.

So let's say you've spent your life becoming a good engineer, are in your late forties or early fifties, and Carly Fiorina of some other MBA schmuck with a penchant for short-term quarterly bottom line profits comes along and sends your job over to Malaysia. Then some young whippersnapper snot-nose kid tells you, well, screw you, old man, just go back to school and learn a new career, or quit complaining and go down to WalMart and grab a mop. Yeah, like you're going to go back to school for another 4 or 5 years to become a nurse, then compete with some Filipina import for a job on the 11 p.m.-7 a.m. shift, while you're in your mid-fifties? F-that noise.

[TXBSAFH]

Exactly.

[CasearianDaoist]

Or the increase of the entitlement programs that will come down the pike. The good thing is that their agruments are getting to the point were they are laughably weak. And conditions will just get worse, this is just the very beginning of this.

[templar]

Ask yourself one question: Why does anyone go into business in the first place. Is it: ...

Ask yourself: Why should we grant special privileges, immunities and protections to businesses that do not benefit Americans first? If these outsourcing businesses want to give up corporate status and do business as individuals and partnerships, I say great, let them. Otherwise, I feel justified in requiring domestic benefit from granting the special status of an American Corporation; something that I am being asked to pay the price for out of my pocket if they do not provide an equal benefit to me.

[CasearianDaoist]

Exactly. It is not your mom and pops that are offshoring it is huge multinationals that fancy themselve to be quasi nation states, or at least extra-national players with no loayatly to any group of people outside themselve, not even their comsumners, really. Let them reregister in another country. The fact that trillionsof the taxpayers' dollars has been invested in Science and Technology programs would in and of its self justify you position.

[rudypoot]

I feel this... I feel that. You have no facts. I can appreciate the emotions generated by this subject, but they don't serve your argument. Start thinking and stop feeling.

Having the goverment pay a corporation to hire a specific group of people is just another form of welfare (or affirmative action). Having the government force a company to hire a specific group of people is fascist. You want one or the other. Which is it?

[templar]

I feel this... I feel that. You have no facts.

Everything I have said is factual and based on facts. American corporations are granted a special status by the government (which entails protections I pay for with taxes), they have received the end result of trillions of economic development and research dollars spent by the government (which is my tax dollars) and they should be required to benefit the United States primarily in return for this status and advantage.

What part of this do you dispute and why?

[TXBSAFH]

Giving a company contracts and legal protection when they offer no loyalty or benefit to the citizens of that country is also wrong.

[Cronos]

will immediately be seized by greedy capitalists and stuffed inside mattresses.

Right on comrade. Once the Politburo take over we will slaughter the bourgeouis and install Lenin and Karl Marx statues everywhere. Workers of the world unite!!! </sarcasm

[rudypoot]

Giving a company contracts and legal protection when they offer no loyalty or benefit to the citizens of that country is also wrong.

You keep typing but all I read is Blah blah blah. Still no facts. You are only giving me knee-jerk reactions. Again, the purpose of a corporation is to make money, not to employ people.

Why don't you spell out what you really want. Do you want the federal government to act like a giant teamster union?

[Cronos]

IF "Outsourcing [assumed to be Offshoring] is harmful to the citizens of this country."...Is foreign-owned manufacturing based in the U.S. also harmful to the citizens of this country?

Yes. All those German and Japanese firms that outsource work to us are TRAITORS. Kick them out! Raus auslander, raus!

[TXBSAFH]

It would seem you argument is that corporations have only one duty, to make money. If that is true then why should we offer them and their shareholders any legal protection. I do not want an as you put it large government teamster union, but I am tired of offering these legal entities the protection of our country and getting nothing in return.

I also would ask that you check out one thing, I have not had a chance to do it myself, but I have talked to someone I consider very reliable. Read the corporate chaters for some of the older corperations, Dupont, Ford for example. I have been told that they specifically mention that these corporations have responciblities to the society. That they are given the protection of law in exchange for providing jobs and economic growth. If they choose to no longer do this then should we offer them the benefits they currently enjoy?

[Havoc]

Gee, the IT industry employers getting together now to tell us that losing our jobs is good for us.. Who would have expected that.. (/sarcasm).

[TXBSAFH]

They Us the are talking about is not the us who vote and pay taxes in the middle class.

[TXBSAFH]

One fact I think you might want to keep in mind. I work in IT, and a good number of my friends are also in IT. We get together about every 2 months at a pub to network and have some fun. The last three meetings Outsourcing was a hot topic on conversation. We all either have been outsourced or know someone close who has. And to a man there I was told that this would be a very important issue to them in this election. What do you expect people who jobs have been shiped overseas to forget that fact when they vote in November?

[Havoc]

Foreign interests have established business within the US market to produce by and for the US market. US industry and IT is NOT doing this. They are offshoring to Produce goods and services in other markets that are produced for the US market.

TWO COMPLETELY DIFFERENT THINGS! If you want to compare these things, you should be HONEST enough to note the glaring difference between them.

One is competition in a market using its rules, freedoms and restrictions, the other IS NOT.

Thank you